Poland Mulls Bailout for Troubled Construction Firm

Some Polish officials are mulling ways to bail out a large construction company that has been building infrastructure for the government. Critics don’t see the point.

Poland presents itself as one of the few remaining healthy countries in Europe where rules of capitalism are respected. The entrepreneurial spirit in the nation is seen as one of the reasons for Poland’s stellar performance throughout the post-Lehman financial crisis.

Growth will slow from 4.3% in 2011, but the rate of expansion around 3% expected this year will be much higher than in most European countries.

But construction firms in the country are dropping like flies and Poland’s banking sector, which lent to them, will feel the heat. Builder PBG SA and its units in June filed for bankruptcy protection, saying they were insolvent due to capital-intensive road construction contracts, continued exposure to potential claims related to the construction of Poland’s National Stadium in Warsaw and a delay in negotiations with banks. Several other companies have also sought bankruptcy protection.

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